Vickhouse v. Fidelity Bond & Mortgage Co.

508 F. Supp. 1096, 1981 U.S. Dist. LEXIS 11033
CourtDistrict Court, E.D. Virginia
DecidedMarch 9, 1981
DocketCiv. A. No. 80-0242-R
StatusPublished

This text of 508 F. Supp. 1096 (Vickhouse v. Fidelity Bond & Mortgage Co.) is published on Counsel Stack Legal Research, covering District Court, E.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Vickhouse v. Fidelity Bond & Mortgage Co., 508 F. Supp. 1096, 1981 U.S. Dist. LEXIS 11033 (E.D. Va. 1981).

Opinion

MEMORANDUM AND ORDER

WARRINER, District Judge.

In this action involving a breach of an employment contract, plaintiff claims in Count III that defendant wilfully, wantonly, and maliciously refused to pay plaintiff sums due to him under the employment agreement. Defendant has filed a motion for partial summary judgment on the issue of punitive damages. The motion is GRANTED.

Under the law of Virginia, which is controlling in this diversity action, recovery of punitive damages in breach of contract actions is permitted only “in those exceptional cases where the breach amounts to an independent, wilful tort....” Wright v. Everett, 197 Va. 608, 615, 90 S.E.2d 855, 860 (1956). The parties have not cited a Virginia case in which a plaintiff actually recovered punitive damages for breach of contract. As an apparent result of the lack of authority in the breach of contract context, the parties have referred the Court to the standard for recovery of punitive damages in ordinary tort actions as an indication of the standard of proof in a contract action. That rule is aptly set forth in Giant of Virginia, Inc. v. Pigg, 207 Va. 679, 686, 152 S.E.2d 271, 277 (1967):

Where punitive damages are asked there must be proof of actual or express malice. (Citations omitted). Actual malice is an essential and controlling factor for the recovery of punitive damages. Evil intent cannot be presumed or inferred from mere mistake.
The general rule is well stated in 54 C.J.S. Malicious Prosecution § 84, pages 1056, 1057:
“in order to recover exemplary or punitive damages, [plaintiff] must show that defendant acted with actual malice, in the sense of personal ill will, or under circumstances of insult, rudeness, or oppression, or in a manner showing reckless [1097]*1097and wanton disregard of plaintiff’s rights. Also actual malice must be shown by evidence especially addressed to this question; it cannot be inferred from a showing of want of probable cause.”

Plaintiff concedes that to be entitled to punitive damages for breach of contract, he must show at least “actual or express malice.” In fact, under Wright v. Everett, supra, it appears that plaintiff must also show that “the breach amounts to an independent, wilfull tort.”1 It is plaintiff’s contention, nonetheless, that summary judgment on the issue of punitive damages would be inappropriate at this juncture of the case because there is a genuine dispute between the parties with respect to the reasons for defendant’s breach of the employment contract. This may well be true. There are, however, no facts before the Court to support the claim that defendants committed “an independent wilfull tort” with conduct which was “wanton, malicious, oppressive, and constitute[d] reckless disregard for [plaintiff’s] rights.” Indeed, the record merely sets forth a run-of-the-mill breach of contract claim. The allegations do not support “an independent, wilfull tort.”

It is especially significant that plaintiff had three opportunities to set forth facts supporting his claim that defendant in an independent tort acted maliciously and with ill will toward him, but he has failed to provide such information. In defendant’s First Interrogatories, plaintiff was asked to

identify with specificity all facts or applications of law to fact supporting or relating to the allegations in Paragraph 24 of the Complaint that the alleged acts of Fidelity Bond were “wanton, malicious, oppressive, and constitute^] reckless disregard for Vickhouse’s rights,” and that Fidelity Bond is liable to Vickhouse for punitive damages. (Interrogatory One).

Plaintiff responded simply that defendant had breached the employment contract; that defendant had taken the position that nothing was due plaintiff under the contract; that defendant had failed to give an explanation for this position; that defendant had refused to explain how it calculated certain financial factors set forth in the employment agreement; that defendant charged without explanation warehousing fees against plaintiff as an operating expense; and that defendant refused to provide plaintiff with financial data that would enable plaintiff to calculate amounts due to him under the employment agreement. Plaintiff specifically stated that “[he] cannot and will not speculate as to [defendant’s] motivations or purposes in [taking the position that nothing was due plaintiff under the terms of the employment contract].”

It is plaintiff’s contention that a full and fair reading of the answer reveals that plaintiff has supplied defendant with facts to support his position that defendant acted in a “conscious and intentional” manner. One breaching a contract generally acts in a conscious and intentional manner. Such gives rise only to contract damages. Plaintiff’s answer to Interrogatory One contains no facts tending to show “ ‘that defendant acted with actual malice, in the sense of personal ill will, or under circumstances of an insult, rudeness, or oppression, or in a manner showing reckless and wanton disregard of plaintiff’s rights.’ ” Giant of Virginia, Inc. v. Pigg, supra, 152 S.E.2d at 277, quoting 54 C.J.S. Malicious Prosecution § 84.

In his response to the motion for partial summary judgment, plaintiff had a second opportunity to state by affidavit or otherwise facts which would tend to show that defendant acted with actual malice toward plaintiff. Instead, plaintiff responded as follows:

1. Fidelity refused to respond to Vickhouse’s numerous inquiries relating to his request for Fidelity’s method of calculating financial factors;
[1098]*10982. Fidelity unilaterally charged fees to Vickhouse and upon Vickhouse’s reasonable inquiry questioning such unilateral action, Vickhouse was met with total indifferences; and
3. Fidelity refused to supply Vickhouse with any information relating to the question of fees, charges and calculation until after contract termination and Vickhouse retained counsel.

Plaintiff’s Responsive Brief, at 2. Assuming these facts are true, nothing in them suggests that the breach of contract in this case “amounts to an independent, wilfull tort.” Wright v. Everett, supra, 90 S.E.2d at 860.

Finally, plaintiff’s deposition was taken on 27 February 1981, at which time plaintiff was given a third opportunity to specify facts upon which he will rely at trial to show an independent tort accompanied by express or actual malice. During the deposition, the following colloquy took place between defense counsel and plaintiff:

Q. Is it your testimony then, sir, that for whatever reasons, be they good reasons, bad reasons, sound reasons or unsound business reasons, that the Virginia operations were curtailed or were terminated and that this caused you a great deal of financial hardship, but that this decision was made by Fidelity as a business judgment, even though it may have been an improper business judgment, and not because of any malice they bore you or any of the other branch managers?
A. That was the way it was relayed to me.
Q. That is your belief at the present time?

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Related

Wright v. Everett
90 S.E.2d 855 (Supreme Court of Virginia, 1956)
Giant of Virginia, Inc. v. Pigg
152 S.E.2d 271 (Supreme Court of Virginia, 1967)
Matney v. First Protection Life Insurance
73 F.R.D. 696 (W.D. Virginia, 1977)

Cite This Page — Counsel Stack

Bluebook (online)
508 F. Supp. 1096, 1981 U.S. Dist. LEXIS 11033, Counsel Stack Legal Research, https://law.counselstack.com/opinion/vickhouse-v-fidelity-bond-mortgage-co-vaed-1981.